Abstract
Intestinal stem cell (ISC) differentiation in the Drosophila midgut requires Delta/Notch-mediated lateral inhibition, which separates the fate of ISCs from differentiating enteroblasts (EBs). Although a canonical Notch signaling cascade is involved in the lateral inhibition, its regulation at the transcriptional level is still unclear. Here we show that the establishment of lateral inhibition between ISC-EB requires two evolutionarily conserved transcriptional co-repressors Groucho (Gro) and C-terminal binding protein (CtBP) that act differently. Gro functions in EBs with E(spl)-C proteins to suppress Delta expression, inhibit cell-cycle re-entry, and promote cell differentiation, whereas CtBP functions specifically in ISCs to mediate transcriptional repression of Su(H) targets and maintain ISC fate. Interestingly, several E(spl)-C genes are also expressed in ISCs that cooperate with Gro to inhibit cell proliferation. Collectively, our study demonstrates separable and cell-type-specific functions of Gro and CtBP in a lateral inhibition process that controls the proliferation and differentiation of tissue stem cells.